New Delhi, September 29
The government has cancelled approvals of nine special economic zones (SEZs), including that of Hindalco Industries, Essar and Adani, as no “satisfactory” progress was made to execute the projects. The decision was taken in the meeting of the Board of Approval (BoA) headed by Commerce Secretary Rajeev Kher on September 18. “The Board noted that the progress made by the following developers/co-developers is not satisfactory. The Board, after deliberations, decided to cancel the formal approval/notification/co- developer status, as the case may be, in 9 cases,” the Commerce Ministry said. It said the developers have to refund the duty benefits availed by them.

The International Finance Corporation (IFC) broke its own social and environmental rules, says the Compliance Advisor Ombudsman (CAO) which released an investigation report yesterday. A recourse mechanism for communities affected by private sector projects that the World Bank Group supports, CAO found that IFC committed serious violations of its mandatory safeguards in financing its client, the Coastal Gujarat Power Ltd. (CGPL), which manages the 4,000 megawatt Tata Mundra Ultra Mega Power Project in Kutch, Gujarat.

Stopping short of calling for IFC’s withdrawal from financing the project, the CAO finds that the ‘IFC weaknesses in reviewing the client’s risk assessment and mitigation did not support the formation of a robust view that the project met the IFC’s policy requirements, that IFC did not consider alternative project design to avoid or minimize impacts, and that IFC has not treated complainants’ concerns as compliance issues.’

Machimar Adhikar Sangharsh Sangathan (MASS – Association for the Struggle for Fishworkers’ Rights), the organization of fishing families that filed the complaint at the CAO in June 2011, welcomes the report. “The findings reconfirm the concerns we raised since project construction started,” Dr. Bharat Patel, General Secretary of MASS said. “CAO’s expert findings help bolster our fight to regain the damaged livelihoods of thousands of fishing families in Kutch coast.”

MASS asserted that IFC failed to account fisher people as project-affected people, to adequately assess and mitigate environmental and livelihood impacts, and to comply with mandatory performance standards and national regulations, among others. Dispute resolution attempts did not work, leading CAO in 2012 to do a compliance appraisal, which concluded that MASS complaint merited a full investigation.

In more than one year, CAO embarked on an extensive compliance audit process by hiring external experts, conducting field visits, reviewing relevant reports, and crosschecking with the IFC.

CAO confirmed that IFC did not adequately consider in its risk assessments seasonally resident fishing community and religious minority population to be affected by the project, which excluded them from the application of land acquisition standard, biodiversity conservation and other relevant policies to protect them.

CAO confirmed that that IFC committed major shortcomings in fulfilling requirements to manage impacts on airshed and the marine environment. Specifically, the investigation found that IFC did not ensure that its client correctly applied the 1998 WB guidelines for thermal power that restrict a net increase on emissions of particulates or sulfur dioxide within the airshed. On marine environment, CAO found the IFC to have no robust baseline data on project impacts to marine resources, which constrained it from monitoring marine impacts.

CAO also found that IFC has not assured itself that the plant’s seawater cooling system complied with applicable IFC Environmental, Health and Safety (EHS) Guidelines. This compliance failure risks that thermal plume from the project’s outfall channel will extend into shallow waters and estuaries that pose significant ecological risks on marine resources.

CAO also confirmed the failure of the IFC to conduct an adequate cumulative impact assessment. CAO stressed that IFC should have advised its client that environmental and social risks emerging from the project’s proximity and relationship with Mundra Port and Special Economic Zone should have been assessed by a third party, with mitigation measures developed.

CAO concluded that IFC’s review and adoption of its client’s reports are not robust to ensure the Performance Standards and supervision requirements are met.

IFC rejects findings, backs up the client

An eleven-page response written by Anita George and Willian Balmer, IFC’s Asia-Pacific Director for Infrastructure and Natural Resources and Director for Environment and Social Governance, respectively dismissed CAO findings. Essentially, they rejected expert findings, defended their project decision and their client and issued no remedial action. After a month of silence, World Bank President Kim cleared management response.

Dr. Kim, a physician by trade, was known for championing public health before joining the Bank. Yet, his approval on the IFC response presents a severe diversion from his typical advocacy. With the decision, thousands of fishing and fishworker families will continue to suffer from air pollution, contaminated water and destroyed marine resources that CAO found to be directly linked with the construction and operation of Tata coal plant. CAO found that this wide range of problems is attributed to IFC. Kim, instead of addressing the findings, stood by his IFC staff and their client, Coastal Gujarat Power Limited (CGPL), ignoring the plight of fishing communities adversely impacted by the deadly investment.

“By clearing the IFC response, President Kim sends a clear message that he supports his staff’s denial of science, of expert findings and endorses management’s avoidance of accountability,” says Dr. Patel.

“By flatly rejecting the findings of independent audit body, Kim simply revealed a highest form of hypocrisy in his climate stance,” says Soumya Dutta, a member of India Climate Justice and coordinator of the Independent Fact Finding Mission that produced the 2012 Real Cost of Power report that documented the violations of the company.

Dutta adds: “Kim’s endorsement of the management line indicates his real position that coal does not kill and he will continue supporting the deadly coal plants like Tata that are not only disastrous but also facing serious financial issues. It then contradicts the President’s energy directions paper and pronouncements on moving the institution away from coal financing. His tall talk on climate change is proving to be a charade.”

“That Kim approved management’s dismissive reaction reconfirms the lack of public accountability within the IFC,” observes Madhuresh Kumar of National Alliance of People’s Movements that supports MASS. “Kim sends a damaging signal that the World Bank Group’s internal watchdogs like the CAO and the Inspection Panel are more for namesake; and that despite their findings, it is business as usual for the Bank,” adds Madhuresh. “Kim simply undermined all the findings of the CAO in favor of their client. The President’s clearance smacks of arrogance, refusal to learn lessons and disregard to people and their rights.”

“We wonder why an institution like CAO exists if their findings are not given any value and no action is taken upon it,” said Soumya Dutta. “If President Kim is serious about the accountability that he talks about, and about learning from the Bank’s mistakes to prevent them from occurring again, he should take bold decisions based on the findings.’

Communities demand the World Bank President to stop his charade that he can take people for a ride and take bold actions based on the CAO findings. “Now that World Bank’s own investigations found such serious lapses, it is time for the Bank to sit up and take appropriate and immediate actions. We will not agree on anything short of IFC withdrawing financing from the project,” Dr. Patel said.

BIC is an independent, non-profit organization that advocates for the protection of rights, participation, transparency, and public accountability in the governance and operations of the World Bank and other regional development banks

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The Adani Ports and Special Economic Zone Ltd (APSEZ) is likely to replying to the show causenotice issued by union ministry of commerce and industries, a company statement said on Sunday.

“The company has received a show cause notice recently for new SEZ of 1840 hectares and is in the process of replying the same,” an Adani spokesperson said in a statement. The ministry had issued a show cause notice to APSEZ last week as to why a formal approval granted to it for its new 1840-hectare SEZ should not be withdrawn immediately. The department of commerce, in its notice had alleged that several material facts were not brought to the notice of the department by the company in its proposal for setting up a multi product SEZ at Mundra in Kutch, Gujarat.

The ministry’s notice said, “From the observations, it is prima facie apparent that APSEZ has deliberately concealed and falsified material facts, which have a direct bearing on the grant of approval and subsequent notification, as also misled the department by furnishing incorrect particulars of land and other related facts leading to wrongful approval and notification of the land measuring 1840 hectares as an SEZ.” The proposed SEZ was in addition to APSEZ’s existing SEZ at Mundra. http://www.business-standard.com/india/news/adani-to-file-reply-to-show-cause-notice-/477614/

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The ministry of commerce and industry would soon announce relaxed land-related norms for special economic zones to arrest the slackening pace of growth in these tax-free zones by making certain changes in the SEZ policy. In a major amendment to the policy, enacted in 2006, for the first time the government will change the minimum land requirement across all sectors. It will reduce the threshold limit for each sector-specific SEZ, in the wake of severe constraints faced by the developers in acquiring huge tracts of contiguous land. At present, the minimum land required for multi-product, multi-service, information technology and gem & jewellery SEZs is 1,000 hectares (ha), 100 ha and 10 ha each, respectively. http://www.rediff.com/business/report/sez-govt-to-relax-sez-land-norms-soon/20120611.htm